Morgan Stanley Capital International (MSCI), a financial firm that is responsible for weighing and measuring the performance of stocks, funds, bonds and other portfolio analysis tools, is being investigated by the economic arm of the state of Florida for allegedly harming companies that support the Israelis based on anti-Israel sources or sources linked to the controversial pro-Palestinian “Boycott, Divestment and Sanctions” (BDS) movement.
According to Jewish News Syndicate (JNS), MSCI, like Morningstar, another Chicago-based financial firm that allegedly assigned damaging ratings to a dozen companies that committed “human rights violations” by simply conducting business in the West Bank and East Jerusalem, is giving poor ESG ratings for the same reason.
In a report, JNS revealed that it used a publicly available search tool on MSCI’s website and discovered that the financial firm “has tagged nine companies that generated ESG controversy ratings at Morningstar for doing business in Judea and Samaria with its own such ratings.”
According to the report, the companies are Bank Hapoalim, Bank Leumi, Bank Mizrahi, Caterpillar, CEMEX, Elbit Systems, Heidelberg Materials, Motorola, and PayPal.
ESG ratings are hugely controversial in the United States. Critics say that, rather than seeking to provide investors with information about companies’ environmental and human rights records, ESG standards are essentially dominated by progressive policies, so companies or businesses whose owners do not agree with these ideas are often punished with poor ratings on these indices.
For this reason, states like Florida are embarking on a crusade against notoriously ideological ESG criteria.
According to an MSCI spokesperson, the financial firm does not use sanctions lists in its rating processes. However, according to JNS, the company’s explanation of publicly available methodologies details that MSCI uses press releases from non-governmental organizations (NGOs) and articles from global media.
In the case of Morningstar, 20 states in the country, including Florida, announced an investigation into the firm’s ratings processes for possible violations of the law against the anti-Israel BDS movement and other infractions.
In fact, in the wake of the investigations, Morningstar changed its rating processes after critics said the company gave weight to anti-Israel and pro-BDS materials distributed by global organizations and media that did not do the work to verify the facts beyond the negative media coverage against Israel.
MSCI may have engaged in a similar practice, and Florida now has its eye on the firm, according to JNS.
For example, a copy of MSCI’s ESG ratings for Elbit, one of Israel’s largest technology companies, dated January 2023, says that MSCI deducted 2.4 points from the company’s ESG ratings “due to controversies surrounding Elbit’s participation in the construction of security and surveillance barriers designed to protect Israelis from terrorists,” as reported by JNS.
In the document, MSCI noted these types of controversies as “severe.”
“The MSCI report cited Elbit’s construction of the security barrier in Judea and Samaria at the height of the Second Intifada, which stopped the flood of suicide bombers from crossing from Palestinian Authority-controlled territory to Israel,” JNS states.
The MSCI report, according to JNS, cited criticism of the barrier from openly anti-Israel organizations or organizations that support the BDS movement.
Likewise, in its negative rating against Elbit, MSCI mentioned the company’s construction of the “smart barrier” along the border with Gaza, which was destroyed by Hamas terrorists on October 7, in the bloody attack on Israeli lands.
For these reasons, Devin Galetta, communications director in the office of Jimmy Patronis, the chief financial officer for the state of Florida, said the Sunshine State began investigating MSCI’s ratings processes.
“The State of Florida has proudly vowed to assist our allies in Israel both morally and monetarily. The CFO’s office takes this matter seriously and stands against BDS and anti-Israel practices,” Galetta wrote to JNS. “Our office has referred this information to the State Board of Administration for further review.”
Among the functions of the Florida State Board of Administration is the decision-making power to invest several billion dollars, including Florida’s state pension funds.
